Chinese exporters seek to shed taint

Xi Jin Reservoir, China
— Normally, the catfish thrashing the water as they gulp down their feed at Sun Zhongren's fish farm in this idyllic corner of southern China would have ended up on American dinner tables.

From the net cages in this reservoir, they would have been taken to be skinned, gutted, and filleted on a production line at the Baiyang fish-packing plant in nearby Nanning. But that line, installed earlier this year, has been idled by the latest health scare surrounding Chinese exports.

The US ban on several varieties of fish comes after a number of export safety scandals involving products such as fruit juices, toothpaste, toy trains, and tires, which have tattered the reputation of China's inspection regime.

Now, Baiyang and other top catfish producers are striking out on a novel route that could offer a solution for other export products: They are asking a Swiss inspection and certification company to vouch for the safety of their food.

"We have realized that the US market does not trust Chinese government examinations, so we prefer third-party certification," says Kevin Wang, head of the Chinese Catfish Association, a producer group. "That way we can guarantee quality. Without it, we cannot."

Mr. Wang is in discussions with SGS, a well-known global company based in Geneva, which provides testing and certification services that help traders evaluate potential suppliers.

Baiyang, the largest fish-packing plant in the Guangxi autonomous province bordering Vietnam, has also jumped the gun. The firm approached the local SGS office last May, and is negotiating a deal for SGS inspectors to monitor its operations, according to Wang Ning, Baiyang's general manager.

The company has had no problem with US inspections since it began exporting tilapia to America last year, says Ms. Wang, and sells its fish to Wal-mart, Ocean Park, and other leading retailers.

But "the majority of our American clients hoped for a third-party guarantee of the quality of our products," she says. "Our customers were asking for proof from a foreign agent."

Since Baiyang does 70 percent of its $20 million a year business with the US, those requests counted. "That is a 6 million RMB ($800,000) investment," says Ms. Wang, pointing forlornly to a German-made catfish processing machine standing silent at the head of a long stainless steel table where nobody is working. "Now it is idle. I have laid off 200 workers."

Though the FDA ruling allows shipments of catfish whose importers can prove they contain no drug residues, "the waiting time on the dock in America before inspection is already 40 days and it will now be two months," complains Ms. Wang. "We have to pay for cold storage all that time. It is too costly for us."

The new restrictions on US imports of farm-raised catfish, along with shrimp, eels, basa, and dace (related to carp) are only the latest chapter in a string of scandals that have rocked China's international reputation and drawn attention to the scale of its food sales to the United States.

The FDA said repeated testing of Chinese farm-raised seafood had found "continuing evidence that certain Chinese aquaculture products imported into the United States contain illegal substances" such as carcinogenic antimicrobial agents and residues of antibiotics not approved for use in US seafood.

Fish farmers here acknowledge that some of their peers do indeed use banned drugs to keep their schools healthy in often overcrowded cages, but Ms. Wang insists that "even if some small companies break the rules you have to look at the industry mainstream," which she says abides by US and Chinese regulations.

Her own company, she says, sells farmers fish fry that Baiyang has hatched, provides them with fish feed that it produces, and offers monthly training and technical support to its suppliers to ensure no corners are cut.

"There is a small problem but that does not represent the whole industry," argues Mr. Wang of the Catfish Association. "It is not fair [of the FDA] to affect the whole industry; I'd say 70 to 80 percent of the companies are good ones."

To distinguish those from the outlaws, Wang says, his association plans to select 10 Chinese farm-raised fish exporting companies that have never had any shipments rejected by the FDA, representing about 80 percent of catfish exports. Subjected to monitoring by SGS, they will be approved to market their catfish under the "China Cage Raised Reservoir Catfish" brand name.

Wang says he plans to lead a delegation of catfish producers to the US next month to explain the scheme to the US authorities.

This branding exercise "makes complete sense," says Dan Harris, an attorney with Harris & Moure who advises small and medium companies doing business with Chinese firms. "It is very smart. They are recognizing the reality."

It is not clear how long the scheme will take to finalize, however, and in the meantime, Mr. Sun, the fish-farm owner, says he is "very angry with those individual farmers whose actions have impacted our exports. This is going to cost me about 300,000 RMB ($40,000) a season."

Sun's farm manager, Qian Ren, says he does not understand the problem. "We have never used drugs on this farm," he insists. "I feed these fish and raise them. I know they are safe to eat and I eat them."

That is unlikely to convince FDA inspectors, however. For the time being, Baiyang's catfish line will sit unused. "I could be shipping 200 containers a year," sighs Ms. Wang. "Now we will just have to wait and see what happens."

Troubled Chinese exports

Among recent US bans and recalls of Chinese food and drug products have been: